A six-figure salary is something many of us dream of making! Is $100k a good salary in the US or should you be earning more? Is six figures good?
As it stands, $100,000 per year is a very good salary for an individual in the US as it’s well above the median. It’s important however to compare your salary with similar roles in other firms to get a good market-based benchmark for fair pay. Additionally you will have to consider your level of expenses to assess whether $100k is sufficient or not.
Let’s take a closer look at how far $100,000 can stretch, and how you can start earning six figures sooner rather than later!
What percent of Americans make over 100k?
As per the latest census data available, we estimate that less than than 16% of Americans earn over $100k a year in salary (as individuals). In other words, earning $100,000 a year puts you in the 86th percentile (estimated).
Of course the percentile data will vary by state, so if you love to geek out on statistics, check out the income percentile calculator by state as it’s got tons of data that is pulled from multiple sources.
What’s considered a good salary in the US?
Before tax, a good salary in the US is likely to start at $60,000. This generally applies to most states, but affluent areas will increase your cost of living. This rate of pay is higher than the average salary US citizens can expect to earn nationwide. Let’s look at some statistics to put these figures in context.
For full-time, year-round workers in the US, the median income is around $56,500. However these statistics vary dramatically across gender as men have a higher median income of around $61,200 whereas women are much lower at $51,200.
Once you include all workers in the mix (part-time and full-time), naturally the median falls. For all workers, the median is $45,470.
So if you’re asking the question, is $100k a good salary for a single person? The answer is Yes!
Living Costs to Consider
An important aspect to consider whether you salary is considered ‘good’ or not is to see whether your income level is sufficient to cover your needs. Factors that can impact whether or not you have a ‘good salary’ for your needs include the following
Cost of Living
If you’re living in a Los Angeles as opposed to residing in the suburbs in Alabama, you’re likely to spend more money just to keep the lights on. Living wages in metropolitan areas will be much higher to compensate for this.
Rent, food, energy bills and transportation will all define whether or not you need to earn much more than the $60,000 as defined above. If you are a renter, in some cases you will have to demonstrate that your income is at least 3x the monthly rent payment. In such situations, with a salary of $100k a year before taxes, your ability to rent properties will be limited to those with a monthly rent of roughly $2,800 or lower.
Of course, the size of your family will impact how much you need to earn. I’ll cover this in a little more detail for you below, but it’s simple math! If it’s just you and a partner, you’ll spend less, hypothetically, than if you have two to three children to feed and clothe.
Income taxes, of course, are where things can get a little tricky. The salaries I’ve discussed thus far are before you pay the IRS. The higher your pay, the higher your tax bracket. If you earn $100,000 per year, you’re paying around $24,000 of that to the taxman – and that’s just based on current rates and figures. If you earn bonuses on top of that, your tax rates can climb quite quickly!
Your mileage may vary based on the state you live in, whether you are married or not, and whether you have any other deductions that you can claim. Being married can make a big difference on your income tax bill, as opposed to being single – often by a couple of thousand dollars!
If you own a house, you also have to remember that you will likely owe property taxes, which can be quite hefty in some areas. The interest on a mortgage however is deductible on your income taxes up to a certain limit.
The big-D! Nobody likes to talk about this one, but unfortunately it’s an ever present noose on everyone’s head. You will have to take into account minimum payments on debts that you may have such as student loan or student debt, credit card debt, car loans, etc.
If you need some help with budgeting ideas on how to manage your debt level relative in relation to your income, some ideas like the 10/20 rule may be of value to you. We also have a loan payment calculator that can help you figure out how you could potentially accelerate your debt payoff.
Is $100,000 enough for a single person to live on?
On average, the living expenses for a single person in the US are around $41,000 per year (~$3,420 per month). When considering that an annual salary of $100k a year after tax will amount to around $70-80k after taxes, you’re likely to be very comfortable as a single person.
You should have plenty left over to build your savings and emergency pot, invest to grow your wealth. You can easily aim to save up to $2,000 a month and accelerate the date for your financial freedom! What’s more, you will easily have more left over to use for your personal pleasure.
Of course there are many factors that will be unique to your situation. Location and your spending habits will be the two biggest drivers of your expenses, so you will have to factor those in. Regardless though, a salary of $100,000 is very good for a single person to live on!
Expenses for a single person in the US
If you’re interested in taking a further look at the expenses by major line items, the Consumer Expenditure Survey does a great job of presenting this data. Let’s take a look at what you can expect to pay, on average, nationwide – as a single person.
Of course these figures are averages across the US and you will have to adjust the numbers based on your location to account for the local cost of living. A New York of San Francisco level of expense will be different than one for Wichita or even Salt Lake City.
Is $100,000 enough for a family of four to live on?
On average, a family of four (two adults and two kids) can expect to incur an annual expenditure of between $93,000 to $103,000 ($7,750 to $8,600 per month). A household income of $100,000 (pre-tax) is therefore unlikely to be sufficient for a family of four to live comfortably.
For context, the pre-tax median income for a household consisting of 4 people is $105,433. This means that if your household has four people, and your total household income is $100,000, you are below the 50th percentile for that specific type of household.
When looking across all households (regardless of size), $100k in household income puts you in an estimated 66th percentile. This means that your household earns more than 66% of the households in the US. Or in other words, your household is amongst the top-35% in earnings across the US.
For more details and classifications, please see our household income percentile calculator.
This data might be quite surprising. Please remember that these figures are simply the average. We’re looking at average household figures for income and cost of living across the entire country. Averages can be heavily skewed by high spenders and high cost of living locations, so if you can control your spending, you may be able to live comfortably on this income level.
Additionally, as you may have picked up by now, the location and its cost of living also matter dramatically. The $100k in family income is likely to go much further in Utah than it will in New York.
If you’d like to see how household income percentiles stack up in different areas of the country, do check our household income percentile calculator by state.
Expenses for a family of four in the US
Referring again to the Consumer Expenditure Survey, let’s take a look at what you can expect to pay, on average, nationwide as a family of four.
Again, you’re really going to need to look at your average family income compared to cost of living per state. For more detail, it’s a good idea to check out Sofi’s guide to the cost of living for each state. Their in-depth calculations should offer some idea of what you need to earn – and/or what you may need to cut back on to thrive.
If you are looking for places to cut back spending, some immediate ideas include cutting your transportation costs. $1,400 per month is a LOT! If you need two cars, you could potentially just use one car or two small cars. And of course buying used cars will save you a lot. Other obvious ideas include cutting your bill on eating out and reducing unnecessary spending. Accelerating payments on any outstanding consumer debt, such as student loans and credit card loans will also help significantly in the long run as your save a lot of money on interest costs.
Where’s the best place to live on a $100,000 salary?
The best cities and regions to live on a $100,000 salary really vary from year to year! Excluding the largest cities – like New York, San Francisco, or Seattle – where housing and other costs are expensive, in most other regions you will be very comfortable on an income of $100,000.
Forbes, for example, reported in 2022 that North Carolina appears to be the cheapest (and still pleasant) state to live in. Areas such as Charlotte, Raleigh and Greensboro appear to have comfortable weather and relatively low cost of living compared to many locales.
However, the same report suggests that Columbus, Georgia, Mobile, Alabama and Norfolk, Virginia, are all likely to get you plenty of mileage out of $100,000.
Time Out, meanwhile, suggests that monthly expenses and house prices in Wichita, Kansas, are surprisingly low. Here, a salary of $100,000 will pay two-thirds of your way to a home purchase – if, of course, you spent nothing else!
The same guide also recommends Albuquerque, New Mexico, and Milwaukee, Wisconsin, as affordable places to live if you make $100k. Plenty to choose from!
How can I make more than $100,000 per year?
The easiest way to reach that six figure target of $100k per year is to train in a high-demand profession! You don’t have to be a graduate of Harvard or Brown, however, to get into a highly paid position.
With a year of training plus, you could start earning this level of salary working as a computer programmer, web designer, writer / editor, real estate agent, or network specialist. Not all of these roles require specific education – meaning you could start making big money if you think outside of the box.
With a college education, you can make $100k+ with roles in HR, sales, network architecture, film editing, software development, and even managing funeral homes. The choice is yours.
Without college education, the trades would be one of the best ways to get close to that income level – especially on an after-tax basis. Skilled tradesmen – like electricians, plumbers, welders, carpenters, etc. – are always in short supply. If you work as an independent contractor and earn your income in an LLC or a corporation, you could earn income in a very tax-efficient manner. Even if you only net $70k in that case, your income would be in line with a salaried person earning $100,000 before taxes.
Is $100,000 a year considered rich?
Sadly, $100,000 a year isn’t considered ‘rich’ – if you mean completely financially free. It’s extremely comfortable for single people to live on, but even then, costs are rising, and your living demands could change at any time.
Before we go further – it’s important to define the difference between your income and your net worth. In order to be rich, not only do you need to have a high net worth, but you also need to have income level.
‘Rich’, or at least ‘wealthy’, doesn’t appear to be a status you can achieve until you have almost $2 million in the bank. That’s according to the Modern Wealth Survey, which takes into account opinions of working people and families across the US.
You also need to take a look at who are the highest earners in the country, and what percentage they make up nationwide. For example, to be in the top 1% of earners in the US, you’d need to be making anywhere from $350,000, if you live in West Virgina, to over $900,000 if you live in Connecticut. And yes, I’m talking about how much you need to earn each year!
Unfortunately that $100k a year of salary may not even get you into the top 10% of America’s highest earning people.
So, $100,000 per year is respectable – and may be very comfortable for lots of people and families across America – but it’s sadly not what you’d call ‘rich’. However if you save and invest your money regularly, you might well be on your way to becoming a millionaire. But sadly, perhaps not a billionaire, just yet!
Before You Go…
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by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.